Some Smartphone Snippets: Nokia Q4, HP is Back, Tizen Delayed Again (Updates with Nokia Lumia ASP etc)

Lets do some smartphone items. We're in the Q4 results season and we have Nokia's numbers but Nokia is being naughty, decided not to give us the detail they have always given in the past... Also we have some good news from HP and some bad news from Tizen. Lots of bad news from Tizen. But lets take the Nokia numbers first.

NOKIA SMARTPHONE SALES DOWN AGAIN

So we did not get the actual numbers anymore. I predicted that Microsoft would be doing this when it takes over the Nokia handset business. I'm disappointed Nokia already now is resorting to this move. Why is Nokia not reporting the detail of its handset sales? Because they are down in what is usually Nokia's best quarter, the Christmas Q4 quarter. Nokia did not give us the details but in its Quarterly results it did tell us sequential sales revenues were down 5% for the total sold unit which includes the dumbphones and the smartphones. So in very rough terms smartphone sales should be down something like 5% sequentally from Q3 the last quarter we had the precise number at 8.8 million. Then we also learned that the average selling price is down for both dumbphones and smartphones (that drives down the sales revenue figure) but we learned that unit sales were flat sequentially for featurephones but down for smartphones. This leads me to believe that smartphone unit sales were down somewhat more than 5% sequentially from Q3, so I put it at 7% decline ie 8.2 million units.

Until we get a more official number from Nokia, that is my best guess of Nokia Q4 sales at 8.2 million units in its smartphone unit. That gives Nokia a preliminary market share of 2.5% for Q4, down from 3.5% in Q3 (as I predicted it would happen after Microsoft took over the failing Lumia smartphone business from Nokia). Oh, and the overall handset sales are unprofitable again..


UPDATE - note only moments after I posted this, apparently Nokia already confirmed the smartphone number as 8.2 million haha... not bad guesswork eh? I haen't seen the number yet, that was based on a tweet. I'll go dig for it but we can safely assume 8.2 is the right number and if it is not., I will update this blog again.



UPDATE - as we didn't get the usual info from Nokia smartphones like regional splits, average sales prices etc, its nice that some of the detail is emerging. Mobiili.fi the Finnish mobile industry magazine reported that they counted the revenues based on the info that was out, at 1.1 Billion Euros for the smartphone unit in Q4 (this is down 12% from Q3 when usually Nokia reports 25% jump in smartphone revenues in the Christmas quarter). They also kindly calculated the Average Sales Price ASP for the Lumia lne which was 134 Euros in Q4, down from 143 Euros in Q3. So not only are the customers abandoning Nokia massively when the industry has its best growth quarter, they are not willing to pay as much for the Lumia handsets even with the big phablets and other new devices like Lumia 1020 etc - the Microsoft purchase has damaged the already struggling Nokia Lumia line even more if that is possible Thank you Mobiili.fi for the calculations and I know many of our readers on this blog will appreicate at least those details of total smartphone unit revenues and the ASP for Q4.

Let me mention also one truly brilliant piece of writing by Tero Kuittinen at Forbes - not only reporting on the Nokia Q4 results but also about how and why the US analysts tend to misanalyze Nokia so badly, and why this bodes badly for Microsoft's purchase of the Nokia handset unit. Definitely a must-read article!


For the full year Nokia sold thus about 30.5 million smartphones and had 3% market share, down from 35.0 million in 2012 and 5%, and down from 103.6 million in 2010 the last year before Elop's doomed Microsoft strategy when Nokia's market share was 34.8% and the handset unit grew 52% unit sales and generated Nokia record profits... That is the end of the Nokia tale in smartphones. Sad end but yeah, we saw it coming didn't we on this blog. Lets move to the other news.

HP IS BACK

Hewlett Packard is back again into smartphones, promising us two phablets which will run Android. Lets see them soon! Welcome back HP! For those who still remember, HP bought struggling Palm and planned new smartphones using WebOS but then after a new CEO joined the company, HP suddenly announced the end of its smartphones business in 2011. It then sold the WebOS system to LG. But now they've seen the light again - as PC sales globally fell last year but smartphone sales grew by nearly half. 2013 saw roughly 3 times the sales of smartphones than traditional personal computers in volume and most major PC makers are also smartphone makers led by Lenovo. Now HP has seen it has to be in this game and is back. Very good news and hopefully we'll see some good innovation from HP and not only some 'me too' devices.

TIZEN IS DELAYED (is this the end?)

So this was supposed to be the period of great news for Tizen. We heard suddenly from Japan that NTT DoCoMo will not release the first Tizen smartphones in Q1 now after all. Then shortly after that we heard that Samsung won't release a Tizen smartphone in the first quarter either. What was expected to be big news at the Mobile World Congress in Barcelona with many Tizen anouncements and demos is now apparenty winding down. Some rumors suggest one Tizen phone may be out by ZTE but overall, what was seen as the strongest play of the new platforms is seriously damaged by these news.

I take the NTT DoCoMo news as the most significant. That was my reasoning why Tizen had such a strong insider advantage in the race for the new platforms (Sailfish, Ubuntu, Firefox etc) because NTT DoCoMo controlling about half of the Japanese market had a large enough smartphone customer base to alone sustain an ecosystem. If NTT DoCoMo is out of Tizen, the prospects are really bad. And NTT DoCoMo's strong past support has now turned sour. Then the other obvious big player is Samsung. Now that Sammy also is delaying its first Tizen device that is bad news. We also hear separately that Intel is moving away from its smartphone ambitions (why?) so the whole Tizen world is coming apart. We heard earlier that one of the big brands in the partnership, Panasonic was pulling out of all smartphone business (this was befoe these items of Tizen news, middle of last year) but that was one potentially big hardware brand for this alliance.

So my enthusiasm for Tizen is obviously severely dented. It might still work out, but there is no opportunity if there is no handset. And those handsets will do nothing if there is no carrier support. Before we can believe in Tizen, we need both. At the moment both are severely delayed..... We'll keep monitoring this space. More news expected soon in the smartphones end-of-year results. 

Comments

[RottenApple]

@Winter:

If that is true, the people responsible for that mess deserve to be fired.
I don't see any conflict of interest here, anyway. If Office is their main driver of revenue and the app store would hurt their bottom line - don't offer such software via app store.

It's a clear case of the negative side effects completely overshadowing the intended result - especially since convergence between mobile and desktop is a very likely outcome of future developments where a mobile device is the sole computing unit that, for stationary use gets docked to the stationary hardware. Mobile phones have already reached the point where their computing power can handle most desktop use scenarios so why having multiple systems if one device can handle it all. Microsoft could have owned this future, had they played their cards right. Instead they messed it up completely.

Frankly, none of the current mobile OSs are even remotely suited for such a use case. Microsoft had no vision whatsover. They just copied what the competition already had while failing to see how to make their own offering unique in is usage value to the users. Not only that, they made sure they replicated the worst properties of the competition.

I wonder how Android would have fared, had Google just copied Apple's ideas without adding some specifics that appeal to a different user group, like a more open system that allows users to do what they like with their phone, like sideloading apps from third party places, be less restrictive in how data on the phone can be accessed from the outside, and so on. My guess is it would have tanked in the high end completely, being restricted to phones for iPhones-wannabe-users who can't afford the real deal.

I think the lesson is clear: If your product is merely a copycat of what's already existing the only way to sell it is at low cost to undiscriminating customers who look at the price first but completely ignore secondary expenses. (and behold: That's precisely where Nokia was selling their Lumias!)

[Winter]

@RottenApple
At each point in time, MS will make money milking their Windows/Office monopoly than switching to a different (convergence) model. So, the rational choice is to milk their monopoly to the very end.

[So Vatar]

@Winter

If this is so (and I do not necessarily disagree), then WP and (what was formerly known as Nokia) handsets are not strategic to MS and can be dumped at any time. Leaving Apple and Android/Google as the only relevant players in mobile and maybe in the convergence game.

Where Apple tries to go it alone with premium products and a global marketshare starting point from around 10% (desktop) and maybe well above 20% (mobile). Their earning stream comes mostly from selling premium devices and services around that.

And Google starts from a position of having their search product on almost all desktops (which run mostly Windows as their OS), and their mobile Android offerings on upwards of 70%. Their current revenue stream comes mostly from search and the massive data they have about users.

And MS still owns the (shrinking) desktop market, the "productivity Software" (Office) market, with very little presence in mobile and no visible successful convergence strategy at this time. Their massive earnings stream comes form legacy products (Windows and Office) and increasingly business and cloud services.

Are there other relevant players? Can Samsung win the convergence business? Will the Chinese players be able to play more than the "cheap" card?

[R]

@RottonApple, Winter

Those are horrible recommendations for Microsoft.

For a long time, Microsoft's power over the industry has been its control of the platform. I hated Microsoft, but again and again I had to buy the latest version of Office so I could open documents from other people who already upgraded. I still hate Microsoft, but my latest PC came with the latest Windows pre-installed, and I kept Windows because the device drivers are most functional in Windows.

Now LibreOffice can open practically all of the Office documents that I want to open, when I'm not allowed to use ODF or Google Drive, and most mobile and web developers seem to work on Macs. It's no longer imperative to get Microsoft software. Microsoft is insanely profitable now, but that's driven by increasingly aggressive licensing. When people don't need Microsoft, eventually they'll stop buying Microsoft.

In the long term, that leads to declining revenues, like IBM's mainframe business. It's difficult to see exactly how fast the decline will be. Elop's destruction of the Symbian business was amazing. I think Microsoft's decline will take longer than Nokia's.

Ideally, that would lead to a future of freedom and interoperability. In practice, I think that means another platform dictator will rise. Microsoft is trying very hard to be that dictator. Google is trying to be a dictator, too. Apple doesn't seem to have the will, but is content to skim the cream off the top. It's a very interesting time.

[R]

It's unlikely for Tizen to be significant. I see no reason why it should be more successful than its predecessors.

The primary problem is shipping a quality product.

In the time that the Linux Foundation has been trying to produce a unified Linux platform for mobile, Canonical has shipped 16 releases of Ubuntu including 4 LTS releases. Nokia shipped 5 releases of Maemo before the bureaucracy could ensnare the Maemo team. Even the OpenMoko Freerunner managed a release. What have the Linux Foundation's efforts lead to? The Nokia N9, which was late, and when it was released it was criticized for being *not* exactly MeeGo.

I think it's all process and no product at the Linux Foundation. Bureaucracy.

The major sponsors are determined to be in the middle, not competing with any OEM, but also not producing anything useful for a consumer. The OEMs don't have quality electronic product in their DNA. Samsung may be using Tizen primarily as a backup plan against Google. The car manufacturers have always sucked at mobile platforms, and probably always will. Smart TVs have so far utterly failed to impress, and are a major network security risk.

iPhone was a great product before it was a major platform. Somebody needs to commit to Tizen and make it into a product before I say it's a real contender.

[KPOM]

@RottenApple, "racism" by the Japanese can't account for all of iPhone's success in Japan. After all, Google would rather the Japanese buy Motorola or even HTC than Samsung. Apple's devices have appeal because they are well designed and are fashionable enough to look like they justify the price being charged. It's the Lexus vs. Chevy argument. Yes, a Lexus is just a "fancy Toyota" but it's successful because they have keyed in on the things that consumers in their target market find important.

Whether you like Apple or not, it's hard to argue that their design philosophy is influential. Ultraportables were a niche market until the MacBook Air came out (even though they have been technologically feasible for at least the last 15 years). Microsoft tried for a decade to get tablet computers off the ground, but it took Apple's design approach to make them mainstream. And Apple had the foresight to go with a new processor architecture running at a slower clock speed, rather than adding cores and boosting clock speeds to improve mobile device performance in 2013. They caught everyone else off guard and did consumers a service by forcing the rest of the industry forward.

[RottenApple]

@KPOM:

About the 'racism' argument, I didn't bring it forward. I merely said that Samsung as a Korean company is virtually non-existent on the Japanese market, leaving a huge void in the high end. Since Apple is the only other significant player in that segment, it's almost by default that they fill the void.

Not to mention that the Japanese market shares several similarities with the US concerning how smartphones are markteted.

"Whether you like Apple or not, it's hard to argue that their design philosophy is influential."

Yes, it was all Jobs's work. He's no longer there.

[KPOM]

So Samsung decided to double down with Google and sign a 10-year cross licensing agreement. I guess this means Tizen is dead and Samsung won't be forking Android any time soon.

[Baron--9-5]

@Indian "Official or not we do not buy phones from carriers. Carrier have zero impact on mobile market hence iPhone is at less then 5%. Subsidy would not work here. Its capitalism you get what you can pay for!"

LOL

Keep on repeating that. If I had a dollar for every time it was said that subsidies only worked in the US, I'd be able to buy myself a few more Bitcoins.

Subsidies have come to India, and it will be no different than in China.

And, just so that you know, Apple's target for iPhone in India is the top 5% of the population. So yes, 95% don't need to bother with it.

Lets talk again in 2 years :)

[Baron--9-5]

Re Tizen - I don't how many failures does it take for you guys to realize that open source platforms have NO CHANCE in fast moving consumer markets. Where is Linux on the Desktop? Nowhere. On the slow moving, predictable server market it is successful.

Why was Android/OHA successful? Because Google, and Google alone decided what was in and out. Whay was Mac OS X, iOS successful same thing. Both use open source (Linux, BSD), but are under control of a single, maniacally focused company).

That is what it takes. Technology is moving too fast to have even two companies (e.g. Nokia+Intel, Samsung+Intel) in the mix.

[Baron--9-5]

Re Microsoft strategy. It is very simple. As I posted before. PC/GameConsole/Tablet/Phone/SmartPlayer are a continuum of personal Internet devices, with sub-specializatiosn.

Microsoft is well positioned. With 90% Share in PCs, 40% share in Game consoles, soon-to-be (my opinion) 10% share in tablets, and trending to 5% share in Phone.

It is NOT a bad starting point. If you add Microsoft's device share across all categories and compare to Apple and Google, you will see that all three are in same ballpark. Google leads in phones, Apple leads in Tablets, etc.

Beyond those 3, there is nothing, It is a total wasteland. The closest is Amazon with a 10% share in tablets.

[Sander van der Wal]

Tizen is dead. You cannot keep on announcing it will be ready next quarter, and then postpone again indefinitely.

I agree with Baron95, but for different reasons. Open Source works fine for commodities. OS kernels are now commodities, servers are commodities. Why? Because they work for business only, and businesses only care about ROI. So Open Source works fine here. Costs are shared, which makes things cheaper.

Smartphones and tablets are not commodities. Consumers value ease-of-use very much indeed, so innovating there is very important. You want as much advantages here as youi can get, and telling all your competitors about your state of play is not good.

And there's the reason Jolla isn't going to work either. They have no advantage at all, and their community will not have the amount of talent iOS and Android will get because there's no money there.

[RottenApple]

@Baron95:

"Keep on repeating that. If I had a dollar for every time it was said that subsidies only worked in the US, I'd be able to buy myself a few more Bitcoins."

Fairly priced subsidy models will work everywhere. But fairly priced subsidy models don't bring much of an advantage for Apple because someone still needs to pay for that $600 phone.

There are subsidized plans here in Germany, for example, but they look quite different from what would benefit Apple. With these plans the iPhone would not be cheap and attractive but a steady money burner with exceptionally high monthly rate (and not surprisingly, most subsidized data plans therefore come with mid range devices, not high end, because that's the only phones with which they can be priced attractively.)

The US market is not the blueprint for subsidies, because it requres a lopsided market to work where there's no real competition. The US market finances its high end by spreading out the costs to all users, not just those with high end hardware.

Try such a business model in a country where people are used to buying unlocked phones, or where competition is actually working, and it'll mostly fail because even with a two year financing plan the cost for the hardware is immediately apparent in the pricing - not just in the way of a $199 upfront payment but as the full cost of the phone plus interest spread over 24 months. Much harder to sell expensive stuff in such a market to customers who do not really need it.

Hell, if my added cost for getting a high end phone was just $50 (that's $199 minus the resale price for the phone after 2 years) I'd take it, too.
Of couse I don't have to. I don't need the latest and greatest hardware because I'm not a gamer so I rather save the money for more important (or more rewarding) things than the ability to brag with the lastest iGadget.

[Baron--9-5]

@RottenApple You still don't get it, do you?

Apple is NOT interested in having penny pinchers, non-spenders in digital content, etc as customers.

They are NOT selling you a device.

Apple wants to sell you a device as a way to consume iTunes digital content and as way to have you buy other Apple products that share the content.

In the US and Japan, the target market may be 50-70% of the population. In India it may be 3-5% (not a typo) of the population. In Germany, somewhere in between.

Why don't you go and tell Porsche who they can sell more cars in Somalia. Or tell them why they are flawed because their cars are too expensive.

We all get it. You don't like Apple and Apple is not targeting the likes of you, Move on.

[KPOM]

@RottenApple, regarding the design, it wasn't all Steve Jobs' work. A lot of it was Jony Ive. He's still there. As for the US market, we've got a lot more competition than you think. T-Mobile and Sprint have gotten very aggressive lately. And with virtually everyone on smartphones now, just about everyone has "high end" hardware. You ignore our tablet market (almost completely unsubsidized despite the carriers' attempts early on) in which Apple devices sell at comparable premiums to the rest of the market, but they still have a healthy share of the market.

[Saksalainen]

@LeeBase ... Ooh my gosh yet again sure a ipeople. From what century are you and is your pure iLove Apple somehow related to Tomi's post???

[Saksalainen]

@Baron--9-5 I don't know the market share numbers in Germany but me being from there, Mr. Snoden has helped to keep Apples iPhone numbers significantly low :-) I think wherever you go thought German big cities there're Samsung people. Since beginning of this year you might also find a few Jolla people. Germany is the second most preorder country for Jolla handsets after Finland, but that's only the high-end geeks like me :-)

[Baron--9-5]

Apple results conference call in 1/2 hour. Should be a good one.

[Baron--9-5]

@Saksalainen Really? You mean to say that the country with THE LARGEST POPULATION of all the countries who can order Jolla is #2? Wow.

Why are we even discussing Jolla here? While I like what they have done, it is completely irrelevant. It is a neat, unprofitable geek venture. Nice, but inconsequential.

As to Snoden impacting Apple sales, I'll guarantee you that Apple share will grow in Germany as soon as the large screen devices arrive. Watch. I bet you one Bitcoin - taker?

[Baron--9-5]

51M iPhones - up a little - a little light - I thought they could hit 55M)
26M iPads - up a lot
4.8M Macs - up a lot

$14.50/share

On other news, Kantar released their December numbers. Windows i crushing it. 10.3% across Europe5, double digit in France, UK, Italy (17%+ in Italy). Windows almost doubled to 4.3% in the US from just 3 months ago.

Folks, and these are rolling averages.

Microsoft is not only solid #3, it is actually gaining ground. Well, at least according to Kantar, which used to be "the best" according to Tomi, until it started showing Windows massive growth. Then he never ever quoted it again.